FERC Directs NERC to Modify Proposed Implementation Plan for Application of CIP Reliability Standards to Nuclear Generators

Yesterday, the Federal Energy Regulatory Commission (FERC) issued an order directing the North American Electric Reliability Corporation (NERC) to modify and clarify certain aspects of the proposed implementation plan for the application of Critical Infrastructure Protection (CIP) Reliability Standards CIP-002 through CIP-009 to nuclear generators. Because of the directed modifications, FERC did not approve the proposed implementation plan, delaying the CIP Reliability Standards compliance deadline for nuclear generators.

In Order No. 706-B, FERC had clarified that the cyber-security requirements imposed by the CIP Reliability Standards apply to the "balance of plant" equipment within nuclear generators that is not regulated by the Nuclear Regulatory Commission (NRC). However, FERC asked NERC to propose a separate implementation schedule for the implementation of these requirements by nuclear generators. NERC filed the requested implementation plan on September 15, 2009. Under the proposed plan, each requirement in the CIP-002 through CIP-009 Reliability Standards has a unique implementation deadline that is dependent on up to three events:

• FERC approval of the effective date of the NERC implementation plan

• The scope of systems determination regarding balance of plant equipment, including the availability of the exemption process under which certain balance of plant equipment would be shown to be subject to NRC jurisdiction and thus not within the scope of systems subject to the CIP Reliability Standards

• The next refueling outage, if implementation of the applicable CIP requirement is dependent on a refueling outage

In Thursday's order, FERC directed NERC to make certain modifications and clarifications regarding the proposed implementation plan in a compliance filing due in 30 days.

First, regarding the scope of systems determination, FERC directed NERC to state when the framework for making scope of systems determinations will be final and to explain the status of the exemption process. FERC also ordered NERC to explain whether the proposed exemption process will include an application deadline for claiming exemptions and a deadline for NERC to act on the request. According to FERC, the existing vagueness regarding this process could create "open-ended delays" in the exemption application process.

Second, FERC directed NERC to revise the implementation plan to clarify that the implementation schedule for the Version 2 CIP Reliability Standards, approved for other entities effective April 1, 2010, will be identical to the implementation schedule for the Version 1 CIP Reliability Standards originally addressed in the proposed implementation plan. For the future, FERC directed NERC to address the implementation schedule for nuclear generators each time it proposes changes to any of the CIP Reliability Standards.

As a result of this order and the revisions to the implementation plan it requires over the next month, the implementation of CIP Reliability Standards requirements by nuclear generators is likely to be delayed. Hard deadlines will not be established until FERC approves the final version of the implementation plan. However, the clarifications offered by NERC in the upcoming compliance filing should provide essential details regarding the exemption process that are likely to have a significant impact on nuclear generators' CIP Reliability Standards compliance obligations.

If you would like more information on any of the issues discussed in the LawFlash, please contact any of the following Morgan Lewis attorneys:

Washington, D.C.
Stephen M. Spina
Lawrence J. Chandler
Jonathan M. Rund
J. Daniel Skees